Tories attack £45bn cost of PFI hospitals

A finance scheme to build new schools and hospitals, first introduced under the Conservatives, will cost taxpayers an extra £45bn over the next three decades, it emerged today.

The Tories rounded on the policy that they put in place 14 years ago after obtaining figures showing that the eventual repayments for 83 hospital building projects worth £8bn would total £53bn under the private finance initiative (PFI).

The shadow health secretary, Andrew Lansley, said that the PFI scheme placed hospitals in a financial "straitjacket" and called for a fundamental review of the way NHS trusts secured funding for capital projects in the future.

Under PFI, hospitals have been locked into "mortgage" payments over 30 or 40 years, at a time when the government was talking about moving much of healthcare out of hospitals, Mr Lansley said.

"It is perverse that, with hospitals around the country now suffering cutbacks and closures, over 80 NHS organisations are locked into long-term contracts for the building of large hospitals that we have no idea whether the NHS will actually need," he said.

"While there is a key need for private sector investment in the NHS, Gordon Brown has failed to recognise that 30-year-long PFI contracts are often at odds with the government's concept of competition between hospitals.

"The extra cost of £45bn is complete lunacy in the context of an NHS under intolerable financial pressure."

Under PFI, a private company builds a hospital on the basis that it will then receive "unitary payments" from the NHS each year for a period of around 30 years. The unitary costs include the costs of providing maintenance over the lifetime of the contract.

The scheme began under the Conservatives but was stepped up under Labour in its hospital building programme.

A spokeswoman for Unison, the healthcare union which has campaigned against PFI and warned of the extra costs to the NHS, today accused the Conservatives of hypocrisy.

"This is a bit rich coming from the Conservatives," she said.

"It was the Tories who introduced it in 1992 to increase public investment without extra government investment before the [1992] general election."

But the union added to the Tory calls for greater flexibility for NHS trusts seeking to finance projects. "To date, it has been the only show in town."

The Department of Health dismissed Mr Lansley's claims, saying his figures did not reflect the full value of PFI contracts.

"Comparing PFI capital construction value and full life cost is like comparing chalk and cheese," a spokesman said.

"Cost value relates to capital construction, whereas repayment covers the cost of maintaining each PFI hospital over a period of 30 years, such as the cost of feeding patients, cleaning a hospital, maintaining the hospital building - money which would be spent by the NHS anyway regardless of whether it was a PFI project or not.

"It is therefore misleading to suggest that repayments are in any way related to capital cost."